2013 401k and IRA Contribution Limits

The Consumer Price Index for September 2012 was released. Now we have all the data needed to calculate 2013 401k and IRA contribution limits.

401k/403b/457 Elective Deferral Limit

401k/403b/457 contribution limit will go from $17,000 to $17,500 in 2013.

SIMPLE 401k and SIMPLE IRA plans have a lower limit. It will also go up by $500 from $11,500 to $12,000 in 2013.

Traditional and Roth IRA Contribution Limit

Because the Traditional and Roth IRA contribution limit will also go up by $500 from $5,000 to $5,500 in 2013, if you are maxing out all retirement contributions, prepare to contribute $1,000 more in 2013 if you are single, $2,000 more as a married couple filing jointly.

If you are self-employed, the total employer plus employee contributions to all defined contribution plans by the same employer will go up by $1,000 from $50,000 to $51,000 in 2013.

2012

2013

Increase

Limit on employee contributions to 401k, 403b, or 457 plan

$17,000

$17,500

$500

Limit on age 50+ catchup contributions to 401k, 403b, or 457 plan

$5,500

$5,500

None

Traditional and Roth IRA contribution limit

$5,000

$5,500

$500

Traditional and Roth IRA age 50+ catchup contribution limit

$1,000

$1,000

None

SIMPLE 401k or SIMPLE IRA contributions limit

$11,500

$12,000

$500

SIMPLE 401k or SIMPLE IRA age 50+ catchup contributions limit

$2,500

$2,500

None

Maximum annual additions to all defined contribution plans by the same employer

An extra $500 for the 401(k)? Sweet! Looks like if I don’t get a raise next year, I would need to up my contribution by 1% to max out the 401(k), but if I do get a raise, I could leave it at the current contribution % for the whole year. Best to up it 1% until I find out the existence/size of a raise, I suppose.

I probably won’t be able to put anything into the Roth IRA in 2013, so that limit going up doesn’t mean much to me.

Awesome. I’ll be upping my 401k and roth ira contributions then. Have you done any articles on whether to contribute lump sum or dca ira contributions? Right now, I just add 5k once a year to my vanguard roth ira.

@Harry It looks like I should be within the phase-out range this year and my total comp has been going up about 15-25% YOY, not with inflation, so I doubt I’ll qualify next year. The backdoor Roth IRA is a separate decision from the direct Roth IRA, to which I’ll have to put some more thought.

You know what sucks about this? I’ll be able to put another $2000 into retirement accounts next year ($1K into 401K/profit sharing plan and $500 into each of two backdoor Roths). Just when I thought I could max stuff out and have more money to spend, it takes even more money to max it out.

I am 65 years old with an IRA. I know that when I am 70 1/2 I will be required to start using that IRA. I can not find how that works. Will I be required to use a certain percentage every year? Or can I just draw the interest I make on that IRA each year?

See Required Minimum Distributions from the IRS. The amount required depends on your age, and whether your wife is the sole beneficiary of the IRA and whether she’s at least ten years younger than you are.

Is there a maximum % taken from someone’s paycheck to contribute to a firm 401(k) plan? I know that the annual limit for 2013 is $17,500. What I’m wondering if an employee can contribute 40%… 25%… 10% — is there a max per month or per pay period that an employee can contribute? Or is this an internal issue and a question for my Plan Administrator?
Thank you.
Lucy

Harry – I can’t seem to find the answer to this question anywhere. I have a 401(k) plan and my husband has both 403(b) and 457(b) plans. Can we EACH invest $17500 if married filing jointly? i.e. total of $35K? Or is it a total household investment of $17500 across plans? Thank you!

One more question re: 17. above for 2013. I have a 403(b) so can add $17,500 + 5,500 to that (as I’m over 50 years of age)? Then another 17.5K+5.5K to a 457b? Then I have consulting income (sole proprietor). Can I add funds to a SEP-IRA – separate from the other 2 accounts?

Kathy – There are government 457b and non-government 457b. Only governmental 457b plans allow the $5,500 age-50 catch-up contributions. Other than that, yes, you can do all three: 403b, 457b, and SEP-IRA.

If you have only contributed $10,000 to your 401K for 2012, are you allowed to contribute an additional lump sum amount before April 15th? If so how would you do this, so you have documentation to deduct on your taxes? (401K deductions show up on your w2, would you get a 1099R from plan?)

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